NEWS ANALYSIS : China Sanctions May Be More Ballet Than Battle : Trade: Two sides’ posturing is potentially serious. But experts see little short-term impact on U.S., California.

When the United States announced plans to slap 100% punitive tariffs on $1.08 billion of Chinese imports, prompting China to threaten retaliation against American imports, the rhetoric had all the trappings of an impending trade war.

But close observers of the trade relationship between the two great Pacific powers say the Saturday actions, while potentially serious, represent more posturing than fighting and are unlikely to have a significant economic impact on either nation.

“The whole thing represents a carefully orchestrated ballet of professionals,” said Robert Kapp, head of the U.S.-China Trade Council, which represents 400 U.S. companies doing business with China. “Neither side is treating it like a jihad. At some point each side will come back to the table.”

Even if both sides impose sanctions, economists say the short-term impact on the U.S. economy and even the more Asia-oriented California economy would be small. “It’s a valuable potential market in the long term and we wouldn’t want to be locked out forever,” said Larry Kimbell, director of UCLA’s Business Forecasting Project. But in the short term, Kimbell says, China’s export market remains small and there are alternative sources of supply for the Chinese imports targeted by the sanctions, which U.S. officials say would be the government’s largest trade retaliation ever.

U.S. Trade Representative Mickey Kantor emphasized that the products designated for sanctions were chosen to make sure American consumers would not be penalized. Sanctions on products such as toys were struck from the list after hearings last month by lobbyists who argued the measures would hurt the U.S. economy.

“The whole (toy) industry is based in China,” said Charlie Woo, president of Mega Toys, an El Segundo-based toy importer. “It would be very difficult to replace that.”

At issue is American concern over China’s practice of pirating computer software, movies on laser disc and music on CD ROMs for sale in China and for export throughout Asia, at a loss of an estimated $1 billion a year to U.S. companies. Microsoft, Hollywood studios and game makers such as Nintendo are livid.

“China’s outrageous flouting of intellectual-property rights left the United States with little choice but to impose the tariffs,” Howard Lincoln, chairman of Nintendo of America, said over the weekend.

But the hot rhetoric on both sides is tempered by broader issues. China’s $38 billion in exports to the United States represented 30% of its total exports last year. China needs the U.S. market.

An agreement with the United States on intellectual property is also widely regarded as a prerequisite for China’s admission to the World Trade Organization, the successor to the General Agreement on Tariffs and Trade.

“China is fairly isolated (internationally). It’s not just the United States that’s concerned with this,” said Nicholas Lardy, director of the Jackson School of International Studies at the University of Washington in Seattle and an authority on China’s economy. Lardy says admission to the WTO before Taiwan is an important political goal for China.

The United States, in turn, has strong incentive to compromise to ensure its stake in China’s long-term growth. Among the potential losers if the trade conflict escalates and broader U.S. relations with China turn sour are Boeing, the big three auto makers and telecommunications companies such as Motorola and AT&T;, Lardy says.

China is the fastest-growing market for aircraft companies such as Boeing and telecommunications companies such as AT&T.; General Motors and Ford have plans under way to manufacture auto parts in China and hope to expand to full production of vehicles by the end of the decade. Chrysler is negotiating a $1-billion deal to manufacture minivans in China.

In each case, Lardy says, there are competitive European companies that the Chinese could turn to. “This could set back some (American) companies substantially,” said Lardy, who has served as a consultant for U.S. companies doing business in China.

But the sanctions don’t take effect until Feb. 26, and the Clinton Administration could extend the deadline if the Chinese show some signs of being willing to compromise.

And the choice of targeted products seems designed to contain the conflict. U.S. officials, for example, would slap tariffs on such relatively minor product categories as rubber gloves, mushrooms, plastic picture frames and fishing poles.

Moreover, China’s threats to impose sanctions on cigarettes, cosmetics and alcoholic beverages don’t seem designed to strike fear into U.S. industry.

“Because of China’s closed markets . . . there’s very little that the Chinese can do to effectively harm us economically,” Kantor said.

AT&T;, which imports cordless phones from China and exports sophisticated communications equipment, says its trade would not be affected even if the sanctions by both sides go into effect. The company is backing the government’s action. “We support the effort to protect intellectual property and copyrights around the world,” AT&T; spokesman Herb Linnen said.

China has hinted that in addition to imposing tariffs on a range of goods, it might also put on hold efforts by U.S. companies to invest in China. But threats to cut off such investments come at a time when many Western bankers have come to see China as a credit risk. China wants the investment and is unlikely to discourage it because of “a dispute over picture frames and skateboards,” said Kapp, the trade council head.